As a non-finance person who subscribes to Matt Levine, I’m not sure any other industry is as endlessly creative and public.
Take for example a story from Levine’s most recent newsletter, about a recently-popular retail trader strategy. You buy 1 share of a company about do a reverse-split to avoid being delisted from Nasdaq for falling under $1. If the company doesn’t support fractional shares, anyone with a partial share gets their 1 share rounded up to a full share in the reverse-split, so ex. a $0.40 share becomes worth $4.00 in a 1:10 split. Only makes sense with one share, since $0.80 of shares also becomes $4.00, and so on. In the three days from the recent announcement of a reverse-split to its occurrence, one particular company went from 5000 shareholders to nearly 200,000, all requesting their “round-up share”. The company ended up forfeiting ~20% of their ownership to retail traders trying to make a couple bucks, all for maintaining the dignity of staying listed on Nasdaq.
(Levine tells the story better than I; he has a patented style of building up all the relevant financial instruments and market context, then laying down the punchline where the incentives you’ve just learned drive bizarre behavior.)
I’m sure there’s wacky stories in other industries too (medtech? pharmaceutical?), but they tend to be more private. Because in finance all of this happened on the public market, and everyone involved is required by law to publish lots of information, the story can be told.
EDIT: I just realized the actual linked article is much longer than the snippet presented and offers its own, similar-ish answer. I do want to respond to one point from Gwern’s article:
OK, but surely there are still plenty of areas where the preconditions are met? (Particularly rapidly-developing ones, like cryptocurrency or AI recently?) So where are their Matt Levines?
Levine covers both cryptocurrency and AI anyway. Someone could probably focus more on the technical/political side of AI and do something comparable to Levine, though… and, come to think of it, that person is named @Zvi. But, no offense to Zvi who I also read, Levine is a superior writer, so it’s not surprising he has much wider reach.
As a non-finance person who subscribes to Matt Levine, I’m not sure any other industry is as endlessly creative and public.
Take for example a story from Levine’s most recent newsletter, about a recently-popular retail trader strategy. You buy 1 share of a company about do a reverse-split to avoid being delisted from Nasdaq for falling under $1. If the company doesn’t support fractional shares, anyone with a partial share gets their 1 share rounded up to a full share in the reverse-split, so ex. a $0.40 share becomes worth $4.00 in a 1:10 split. Only makes sense with one share, since $0.80 of shares also becomes $4.00, and so on. In the three days from the recent announcement of a reverse-split to its occurrence, one particular company went from 5000 shareholders to nearly 200,000, all requesting their “round-up share”. The company ended up forfeiting ~20% of their ownership to retail traders trying to make a couple bucks, all for maintaining the dignity of staying listed on Nasdaq.
(Levine tells the story better than I; he has a patented style of building up all the relevant financial instruments and market context, then laying down the punchline where the incentives you’ve just learned drive bizarre behavior.)
I’m sure there’s wacky stories in other industries too (medtech? pharmaceutical?), but they tend to be more private. Because in finance all of this happened on the public market, and everyone involved is required by law to publish lots of information, the story can be told.
EDIT: I just realized the actual linked article is much longer than the snippet presented and offers its own, similar-ish answer. I do want to respond to one point from Gwern’s article:
Levine covers both cryptocurrency and AI anyway. Someone could probably focus more on the technical/political side of AI and do something comparable to Levine, though… and, come to think of it, that person is named @Zvi. But, no offense to Zvi who I also read, Levine is a superior writer, so it’s not surprising he has much wider reach.